By Sudip Kar-Gupta
LONDON (Reuters) - Britain's top equity index is set to shrug off this week's accounting debacle at supermarket Tesco (L:TSCO) and uncertainty over next year's election to hit a record high by the end of December, a Reuters poll found.
The poll of almost 50 traders, fund managers and strategists, taken in the past week, gave a median end-2014 target of 7,000 for the blue-chip FTSE 100 index (FTSE), and a mid-2015 target of 7,100 - which would be record peaks.
Among the top global investment banks, both Goldman Sachs and Credit Suisse forecast the FTSE to end 2014 at 7,000 points - about 4 percent above Wednesday's close of 6,706.27.
However, a few of those polled were predicting a pullback, possibly as low as 6,100 points. The most optimistic prediction was for 7,300 by the end of the year.
The FTSE fell this week, driven by Tesco and a drop in major healthcare stocks such as Shire (L:SHP) and AstraZeneca (L:AZN), which were hit after the U.S. Treasury took steps to curb "inversion" deals that allow companies to escape high U.S. taxes by reincorporating abroad.
The move could jeopardise an agreed deal for AbbVie (N:ABBV) to buy Shire for $55 billion and deter Pfizer (N:PFE) from making another attempt to acquire AstraZeneca, after a $118 billion takeover attempt failed in May.
Nevertheless, the majority of those polled expected the FTSE to overcome such dips to rise steadily in coming months, buoyed by the UK's economic recovery and expectations of more central bank stimulus in Europe - Britain's biggest trading bloc.
"I think that 2015 will be generally positive. I believe that the U.S. will raise rates due to continued improvement in the U.S. economy, but this will not be deemed as too much of a negative, whilst the economic recovery continues," said Hantec Markets analyst Richard Perry.
"I also believe that European Central Bank quantitative easing will help to drive European markets higher," he added.
GENERAL ELECTION
The FTSE is down less than 1 percent since the start of 2014, underperforming a near 5 percent gain on the pan-European FTSEurofirst 300 index (FTEU3).
London's FTSE hit a peak of 6,904.86 points earlier this month - its highest since early 2000 - but dropped back, partly due to concerns ahead of Scotland's independence referendum earlier this month.
Some traders had said Scotland's decision last week to vote in favour of staying in the UK would lift the FTSE, but the stock market was then hit by the problems at Tesco and the pullback in the healthcare sector.
Analysts said that uncertainty over who would win a UK general election scheduled for May could hold back the FTSE in the short-term, in spite of their prediction of a longer-term rising trend for the stock market.
Mike McCudden, head of derivatives at Interactive Investors, expected the FTSE to rise to 7,000 points by the end of 2014 and 7,250 points by the middle of next year, but added the stock market could make little progress ahead of the 2015 election.
"I believe the FTSE 100 will remain fairly subdued as we see out 2014 and go through the general election year of 2015. Markets are usually cautious ahead of an election, when the uncertainty of a result drags on performance," he said.
(For other stories from the poll see )
(Additional reporting by Tricia Wright, Atul Prakash and Blaise Robinson; Editing by Toby Chopra)